Letter To U.S. Department Of Commerce: Section 232 National Security Investigation

October 17, 2025

Public Document
FR Doc: BIS-2025-0258
XRIN 0694-XC134

By Electronic Submission

Julia A. Khersonsky
Deputy Assistant Secretary for Strategic Trade
Bureau of Industry and Security
Department of Commerce
1401 Constitution Ave. NW
Washington, DC 20230

Subject: Notice of Request for Public Section 232 National Security Investigation of Imports of Personal Protective Equipment, Medical Consumables, and Medical Equipment, Including Devices

Dear Ms. Khersonsky:

The Health Industry Distributors Association (HIDA) offers this submission in response to the Department of Commerce’s request for comments on the Section 232 national security investigation of imports of personal protective equipment (PPE), medical consumables, and medical equipment.

Medical product distributors streamline procurement for healthcare providers so clinicians can focus on patient care. HIDA member companies work every day to deliver essential products to our nation’s healthcare providers at hospitals, nursing homes, physician offices, surgery centers, EMS agencies, and the home. Distributors provide thousands of products needed to support provider-patient interactions. From routine doctor visits and laboratory tests, assisting seniors with their daily needs, up to the most complex surgeries, distributors ensure providers have ready access to a vast array of medical products.

We share the Administration’s goal of ensuring a resilient supply chain and agree that resilience has national security implications. We also appreciate your thoughtful, category-by-category approach that recognizes each product has unique complexities that require specialized policy approaches and incentives.

However, economic and infrastructure realities, along with real world experience, clearly show that U.S. manufacturing alone will not result in the level of resilience envisioned. More 232 tariffs on medical products cannot by themselves achieve this policy goal. The interests of national security require a holistic, integrated approach to supply chain policy that addresses the substantial infrastructure needs of large-scale U.S. manufacturing. Additional tariffs on medical products will have the unintended effect of slowing the drive towards a more resilient healthcare supply chain.

Section 232 Tariffs On Medical Products Are Not Needed to Bolster National Security

Any additional tariffs would:

1. Stall the momentum of a rapidly diversifying medical supply chain.
2. Not address the underlying realities of manufacturing in the United States.
3. Fail to make U.S. manufacturing a self-sufficient producer of medical products.

The Medical Supply Chain Is Diversifying – Administration’s Goals Are Being Met

The medical manufacturing industry is responding to policy signals and moving away from China. Substantial movement out of China is constrained only by the ability of other countries to scale up to meet the demand. This trend is accelerating, with 85% of medical manufacturers expecting production to continue exiting China in the coming years.¹ The medical supply chain is already working to achieve the Administration's goals of a diversified, resilient supply chain by reducing dependence on China and increasing domestic manufacturing.

In response to the 232 investigation questions (iv)-(vii), the existing medical product manufacturing trend of both reshoring and nearshoring strengthens national security because there is no overreliance on a single market. Americans benefit from this diversified supply chain by having access to cost-effective, high quality medical products.

Medical Manufacturing In The United States Is Substantial And Expanding Rapidly

HIDA’s data shows that 42% of medical manufacturers currently make most of their products in the U.S. This trend is accelerating, with 53% of manufacturers actively planning to expand their U.S. manufacturing footprint in the next two years.²

A sampling of the numerous medical manufacturers that are breaking ground in the United States right now include:

• Utah – January 2025: A $30 million expansion of manufacturing capacity for IV lines³
• California – May 2025: Relocate diagnostic manufacturing from Mexico⁴
• North Carolina – August 2025: A 375,000-square-foot manufacturing facility⁵

In response to the 232 investigation question (ii), the growing domestic manufacturing footprint for medical products is substantial and poised for accelerated growth.

Medical Products Are Subject To 301 Tariffs, Additional 232 Tariffs Threaten Progress

Many medical products are already subject to substantial tariffs. As part of the first Trump Administration’s Section 301 China investigation, a variety of medical products have tariffs ranging from 7.5% to up to 100%. Additionally, medical devices and supplies are subject to the Administration’s International Emergency Economic Powers Act (IEEPA) tariffs.

Layering new Section 232 tariffs on top of existing tariffs will threaten progress the medical industry is making toward the Administration's policy objectives. Additional tariffs at this time would slow reshoring and diversification by introducing uncertainty and changing the cost equation.

Also, 98% of U.S. medical manufacturers rely on globally sourced raw materials for some or all or their inputs.⁶ Existing 232 tariffs on key raw materials (steel, aluminum, and timber) and existing IEEPA tariffs on other raw materials (plastics, resins, nitrile butadiene rubber) are already impacting the cost of manufacturing medical products in the U.S.

In response to the 232 investigation question (ix), additional 232 tariffs will slow the progress toward reaching the level of resilience needed to serve the national interest.

Neither The Supply Chain Nor Providers Can Absorb Tariff Costs On Supplies

Single-use medical disposables, such as PPE, operate with the narrowest profit margins in healthcare. In some cases, the tariffs already in place exceed product profit margins. To date, the medical supply chain has mitigated and absorbed tariffs where possible. This is not sustainable over the long term. Driven by these business realities, at some point, tariffs are likely to impact product cost.

Financially stressed healthcare providers cannot shoulder the burden of new tariffs on medical supplies.⁷ Medicare, Medicaid, and private insurance do not reimburse medical consumables or PPE, with providers needing to factor in the cost of those supplies into reimbursements based on procedure or diagnosis.

Providers are pressured by rising costs and tightening reimbursements. This strain is most pronounced for rural hospitals, where fixed reimbursement rates threaten closures and service cuts.

Mitigation of medical product shortages is vital to national security, with public and private sectors widely using medical stockpiles as a resilience strategy against shortages. Stockpiles enhance national security by pre-positioning medical supply stocks across the United States. They are an important buffer that can mitigate supply disruptions and absorb sudden increases in demand.

The Strategic National Stockpile (SNS) is a key component of the Federal government's preparedness and resilience strategy. The Federal government also funds programs that facilitate stockpiles across the country. Distributors and manufacturers employ this strategy as well, often in partnership with healthcare providers.

Tariffs could increase the cost of maintaining medical stockpiles, which could erode the nation's preparedness and resilience infrastructure. In this way, additional 232 tariffs would impact national security.

In response to Section 232 inquiry questions (ix) and (xii), the imposition of tariffs would negatively impact national security by increasing the cost of medical stockpiles and healthcare costs.

U.S. Manufacturing Cannot By Itself Secure the Supply Chain

For national security purposes, it is impossible to predict the nature or timing of the next major supply disruption. Concentration of medical product manufacturing within a single nation, including within the United States, creates supply chain vulnerabilities. Two recent real-world examples are instructive when considering incentivizing U.S. manufacturing from a supply chain resilience and national security point of view.

• In 2024, Hurricane Helene severely damaged a manufacturing plant in North Carolina that produces the majority of the IV solutions used in the U.S.⁸ While undertaking heroic efforts to re- establish production, the company was able to leverage facilities located around the globe to expedite imports to the U.S. to mitigate shortages.
• In 2022, an infant formula manufacturing facility in Michigan suddenly suspended production due to quality issues, leading to a nationwide shortage.⁹ At the time, 98% of infant formula for the U.S. was produced domestically, with the majority of the market share concentrated in two companies. FDA labeling and composition requirements limited the availability of imported formulas from trusted foreign producers, preventing the U.S. market from accessing global supply alternatives until the factory resumed production five months later.

In response to Section 232 questions (xi) and (xii), our national security is strengthened from a diversified supply chain that is resilient to unexpected disruptions. As illustrated above, these disruptions can occur through spikes in demand and from external events that limit supply.

These are just two of many real-world experiences that highlight often overlooked considerations when leveraging U.S. manufacturing in the context of national security and supply chain resilience:

• Raw Materials and Component Parts: Domestic manufacturers import raw materials and component parts from around the world. 98% of U.S. medical manufacturers rely on globally sourced raw materials for some or all or their inputs¹⁰ – many of which are not commercially available in the U.S., such as nitrile butadiene rubber (NBR), a key raw material for nitrile exam gloves.
• Demand from U.S. Healthcare Providers: Healthcare providers seek high-quality products but are constrained by healthcare reimbursements. Products like medical consumables are not directly reimbursed by insurers, instead providers must account for the cost of supplies within a flat reimbursement rate for a given procedure or diagnosis. This incentivizes providers to purchase the most cost-effective goods, often manufactured overseas where cost of production is lower.
• Sterilization: For medical products that require sterilization, such processes are typically done early in the medical supply chain, often close to the point of manufacture. Ethylene oxide (EtO) gas is used to sterilize approximately 50% of all medical devices used in the U.S.¹¹ Sterilization capacity in the U.S. is at its limit with no meaningful expansions planned. Most new sterilization capacity is being developed outside the U.S. It can take a minimum of two-to-three years to build a new sterilization chamber, which inhibits the U.S.’ ability to onshore additional sterile products.

The conclusions from these representative examples are:

• U.S. manufacturing does not guarantee protection from disruption.
• U.S. manufacturing is not viable for every medical product category.
• Supply chain resilience and national security can be accomplished leveraging global, nearshored, and U.S. sources.

In response to the 232 investigation question (iii), the global nature of the medical product supply chain is a core feature of supply chain resilience. Nearly all domestically manufactured medical products import raw materials or component parts.

Policy Considerations – Recognizing Domestic Manufacturing Realities

The examples above underscore the need for holistic, integrated policy approaches to supply chain resilience to secure our national interests. The reality of domestic medical manufacturing is that in many cases, an entire supply chain needs to be expanded to support U.S. manufacturing. In some categories, global manufacturing options can be the preferred route to building the resilience in the supply chain for national security purposes.

Holistic Supply Chain Approach: Focusing exclusively on the manufacturing of the finished product without a parallel focus on raw materials, component parts, and sterilization will hamper achieving policy objectives. Domestic production capacity is important but could be limited during an emergency because they rely on imported raw materials. Maintaining or expanding domestic production during an emergency requires access to the needed raw materials and components. Likewise, sterilization capacity would need to be expanded to increase domestic manufacturing of sterile medical devices. Additionally, some companies are currently experiencing greater tariff impacts on domestically manufactured products through raw materials and component parts than on imported finished products.

The Importance of Affordability: Companies that have sought to reshore production have found manufacturing a product in the U.S. can be 300-400% higher than current manufacturing costs abroad. U.S. healthcare buyers are cost conscious because of U.S. reimbursement policy, and to date, there has been little openness to paying a premium for a U.S. made medical product over one that is globally sourced.

Best-in-Class Manufacturing: Medical products used in the United States must meet rigorous FDA standards regardless of where they are manufactured. This process is specialized and complex. In most cases, best-in-class manufacturers – regardless of location – have decades of expertise, efficiency and commercial relationships that are difficult to replicate. Replicating that expertise domestically will take significant investment and time.

Understanding Concentration Risk: Substantial manufacturing of a critical product in any single location or region is a key factor in understanding a supply chain’s vulnerabilities and resilience.

Supply Chain Agility: It is impossible to predict the nature and timing of the next major disruption. No two disruptions are the same. Having a number of supply options gives the supply chain the ability to function effectively during unexpected disruptions.

The combined learnings from recent major disruptions reinforces the fact that, in some cases, the goal of supply chain resilience may be best served by leveraging global sources in addition to domestic ones. U.S. manufacturing, while important and in need of expansion, is not always a viable solution. True supply chain resilience needs multiple sets of suppliers and manufacturers.

In response to the 232 investigation question (viii), the policy considerations illustrate the challenges to increasing domestic manufacturing.

The United States Needs A Resilient and Diversified Supply Chain For National Security

A resilient supply chain is a diversified supply chain. Domestic manufacturing is one important component, but the country must maintain a strategic blend of global sourcing to be prepared for future disruptions or emergencies.

Real-world experiences and the economic realities of manufacturing highlight the need for a global, diversified supply chain of medical products. A high concentration of medical manufacturing in any single location – in the U.S. or abroad – creates a risk of supply disruptions from events and situations that cannot be anticipated.

This puts the highest national security priority on the ability of supply chains to function effectively in the face of any disruption the United States may encounter. In an emergency, U.S. national interest is best served by having a number of supply options at America’s disposal.

HIDA’s Recommendations

Domestic manufacturing is one aspect of resilience. Alone, it is insufficient to meet our national security needs. The path towards a truly resilient medical supply chain requires targeted, integrated policies that balance domestic capacity with global access.

1. Let the Supply Chain Diversification Continue Uninterrupted
   The Administration’s goals of diversification out of China and reshoring to U.S. and other favorable nations (nearshoring) for use by U.S. healthcare providers is being accomplished and is poised to accelerate. Additional 232 tariffs at this time will disrupt and slow this progress.
2. No Additional Tariffs on Medical Products
   Section 232 tariffs on medical products will not bolster national security. With no relief from IEEPA tariffs, neither the medical products industry nor its healthcare provider customers can absorb additional tariffs.
3. Permanent Extensions of Section 301 Exemptions
   The existing exemptions to the Section 301 tariffs, which include over 30 medical products, should be made permanent.
4. The Continuation of Existing Trade Policies
   The Administration should commit to the full continuation of existing free trade policies, particularly the USMCA and CAFTA-DR, for medical products. Longstanding trade policies like Chapter 98 of the Harmonized Tariff Schedule should continue.
5. Incentives To Promote Domestic Manufacturing
   Government incentives are mandatory to promote domestic manufacturing.
• Changing Medicare and Medicaid reimbursement policies to reward use of domestic products through enhanced reimbursements.
• Tax relief for research and development of medical products.
• Regulatory relief and streamlined regulatory approval processes will make it easier for manufacturers to expand their domestic footprint.
• Domestic manufacturing credits to lower tax burdens and spur growth.
• Federal support to maintain surge production capacity.
• Leveraging the purchasing power of the federal government to provide long-term contracts to key product categories without significant domestic manufacturing capability. A guaranteed minimum level of unit demand and capital investment for additional equipment are also crucial.

Thank you for the opportunity to inform the ongoing Section 232 investigation. We appreciate the Administration's commitment to strengthening our national security through a resilient domestic medical supply chain.

Sincerely,

Kathryn DiBitetto
Vice President of Government Affairs
Health Industry Distributors Association

1. Results of a HIDA member survey, fielded between September 29 and October 3, 2025.
2. Id.
3. BD (Becton, Dickinson and Company), BD Boosts U.S. Manufacturing of Critical Medical Devices (Jan. 15, 2025), https://news.bd.com/2025-01-15-BD-Boosts-U-S-Manufacturing-of-Critical-Medical-Devices.
4. Siemens Healthineers, Siemens Healthineers Invests $150 Million in New and Expanded U.S. Facilities (May 14, 2025), https://www.siemens-healthineers.com/en-us/press-room/press-releases/us-investments.
5. Thermo Fisher Scientific, New Mebane, NC Facility Boosts U.S. Supply Chain Resilience, Thermo Fisher Scientific Newsroom (Terri Somers, Jan. 2025), https://corporate.thermofisher.com/us/en/index/newsroom/Our-stories/new- mebane-nc-facility-boosts-us-supply-chain-resilience.html.
6. See supra Note 1.
7. The Cost of Caring: Challenges Facing America’s Hospitals in 2025, Am. Hosp. Ass’n (Apr. 2025), https://www.aha.org/system/files/media/file/2025/04/The-Cost-of-Caring-April-2025.pdf.
8. Heather Landi, U.S. Hospitals Prep for Supply Chain Constraints in Wake of Baxter International Plant Closure, Fierce Healthcare (Oct. 7, 2024), https://www.fiercehealthcare.com/providers/us-hospitals-prep-supply-chain- constraints-wake-baxter-international-plant-closure.
9. Kevin Ketels, The Current Baby Formula Shortage Sheds Light on Longstanding Weaknesses Within the Industry, PBS NewsHour (May 19, 2022), https://www.pbs.org/newshour/economy/the-current-baby-formula-shortage-sheds- light-on-longstanding-weaknesses-within-the-industry.
10. See supra Note 1.
11. U.S. Environmental Protection Agency, Our Current Understanding of Ethylene Oxide (EtO), EPA.gov, https://www.epa.gov/hazardous-air-pollutants-ethylene-oxide/our-current-understanding-ethylene-oxide-eto (last updated Aug. 25, 2025).